Introduction to Finance

Saving with a Credit Union
Banks’ fondness for charging fees can make banking expensive 
for individuals who do not shop around for the bank that best and 
most inexpensively meets their needs. For individuals, the best 
place to bank may not be a bank, but rather a credit union. Credit 
Union members, who have some kind of common affi
liation, such 
as an employer or religious organization membership, run these. 
Credit unions are tax-exempt depository institutions. Although 
they do not pay any taxes, any interest or dividends received by 
their members is taxable.
While both commercial banks and credit unions accept the 
savings deposits of individuals, their lending objectives diff er. 
Commercial banks provide loans to both businesses and individu-
als, whereas credit unions emphasize consumer loans.
Credit unions often pay slightly higher interest rates than 
their commercial bank counterparts on interest-bearing check-
ing accounts, savings accounts, and certifi cates of deposit. At the 
same time, credit union members often receive lower credit card 
and new car loan interest rates than what they would have to pay at 
a commercial bank. However, interest rates on home equity loans 
tend to be about the same at credit unions and commercial banks. 
Of course, in order to compare and take advantage of possible 
diff erences in savings and borrowing rates between a commercial 
bank and a credit union, you must fi rst become a member of a 
credit union.
Personal Financial Planning
1
This nickname was used to refer to banks located in wilderness areas that were more accessible to wildcats than 
people. This made it diffi
cult for anyone to redeem these banks’ notes.

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3.5 Regulation of the Banking System
57
General Banking Legislation
A variety of laws have been passed in the United States to regulate the banking system. Early 
laws focused on establishing, fi rst, a system of federally chartered banks and then a system 
of central banks. More-recent legislation has focused on deregulating banking activities and 
improving the eff ectiveness of monetary policy.